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How Prescription Drugs Are Altering American Lives, Minds, and Bodies
by Greg Critser
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For a brief period in the late 1960s
and early 1970s, responding to
lawsuits and studies by Ralph Nader over
everything from unsafe cars to
overpriced drugs, the commission had
gone on a pro-consumer binge under
Chairman Miles W. Kirkpatrick, and
mainstream business types, the core of
the imperiled president's political
base, had railed against him during the
1972 election season. To calm them, in
1973 Nixon appointed Engman; he
was supposed to "restore order." In
other words, to put things back where
they were before the Naderites inside
the commission got out of control again.
But Nixon, and whoever had done the
personnel file work,
misjudged Engman's consumer credentials.
Although he was a classic 100-
percent-free-trade, pro-competition
Republican, Engman had developed a
strong pro-consumer bent. As Time
magazine would later put it, Engman saw
the world as a "Ralph Nader out of Adam
Smith." You could best serve the
consumer, he deduced, by opening up the
marketplace.
With that in mind and the national
economy in trouble — inflation
was up and productivity was down —
Engman went looking for ways to use
the FTC's power to make the country more
competitive and to make
American life more affordable. Quickly
he diagnosed a novel cancer on the
nation's economic corpus: the regulatory
agencies themselves. By making it
so hard for small businesspeople to
enter their respective industries, the CAB
and ICC were hurting the consumer and
inhibiting innovation, thereby
retarding long-term economic growth and
keeping prices unnaturally high. In
a brilliant, landmark speech at the
normally staid Financial Analysis
Conference in 1974, he laid out his
thesis: "Much of today's regulatory
machinery does little more than shelter
producers from the normal
competitive consequences of lassitude
and inefficiency . . . [it] has simply
become perverted." As a result, "the
consumer is paying plenty in the form of
government- sanctioned price fixing." It
was time, Engman said, to consider
serious deregulation.
Engman also went after what he called "professional conspiracy." He sued the American Medical Association
over its ban on physician
advertising — something he believed
deprived consumers of the ability to get
the best doctor for the best price. He
went after state medical societies for
their bans on the advertisement of
prescription drug and eyeglass prices. In
fourteen months he filed thirty-four
antitrust actions. "The consumer was
always the bottom line for Lew," recalls
Bob Lewis, who served on Engman's
staff. "'Is this going to benefit the
consumer?' That was always the question
he asked at the end of the debate about
anything."
By the time he left the FTC in 1977,
when a Democratic
administration was about to take office,
Engman had succeeded in making
deregulation a mainstream Republican
goal. At age forty-two, he was a GOP
legend.
And so it was hardly surprising that,
in the fall of 1980, with a new
president named Ronald Reagan onboard
who was committed to getting
government out of every aspect of
American life, Engman would again be
sought for his leadership skills. This
time the organization in need of help
was the Pharmaceutical Manufacturer
Associations. The PMA represented
the nation's biggest brand-name drug
makers, who were often referred to
simply as "big pharma" or simply "pharma." (The organization itself formally
changed its name to the Pharmaceutical
Research and Manufacturers of
America, PhRMA, in 1994.) The PMA
believed that the industry was in a
crisis, suffering from increasing costs,
slipping sales, foreign competition,
and government over-regulation. It was a
crisis so severe as to provoke
pharma CEOs to wonder out loud "whether
there will even be a U.S.
pharmaceuticals industry in twenty
years." Then again, just about every
major industry wondered something like
that in the early 1980s, when it was
widely believed that Japan was doing to
U.S. industry what it had failed to do
with bombs thirty-five years earlier.
Copyright © 2005 by Greg Critser. Reprinted by permission of Houghton Mifflin Company.
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